Tracey Smith, President, Numerical Insights

Tracey Smith is regarded as a thought leader in the field of analytics and speaks extensively at conferences and corporate events. She has over 25 years of experience in mathematics, statistics and data visualization and holds degrees in Applied Mathematics, Mechanical Engineering, and Business from well-recognized universities in Canada and the U.S.

Ms. Smith’s career spans the areas of mechanical engineering, supply chain, and human resources. Prior to forming Numerical Insights LLC, Ms. Smith led global strategic initiatives for FedEx Express World Headquarters, process improvement projects in supply chain and mathematical simulation creation for an automotive company.

She has been recognized as one of the “Top 50 Global Influencers in HR Analytics” and one of the “Top 15 HR Analytics Experts to Follow” in 2017 and 2018. She is also CPSM certified through the Institute for Supply Management.

What is currently missing in the way overall employee performance is being managed?

Unfortunately, no matter how you look at it, employee performance management is a subjective process. Ultimately, an employee’s performance is judged by one person. Even if multiple people contribute to performance measurement, ultimately, one person determines an employee’s performance score and salary increase.

This leads to another performance management issue. Because the performance score is used in most companies to justify a “legally defensible” salary increase, employees tend to “tune out” during their performance discussions because the only thing that matters is the final number.

For that reason, some companies have removed the annual performance evaluation and replaced it with an ongoing performance discussion. This is easily done with employee groups whose salary increases can be increased as one group in a step-like fashion. The disadvantage of this method is that these employees have no incentive to exceed beyond their peers.

Assigning performance scores is advantageous when a company needs to encourage competitiveness and innovation in its workforce. It is a disadvantage when a company needs to encourage collaboration. An example of the latter would be a scientific research team or engineering team that needs to leverage each other’s ideas for new discoveries. The problem is, in most companies, both competitiveness and
collaboration is required to succeed.

Given that a company’s workforce now has a significant proportion of virtual and freelance workers, how should performance management include them?

Goal alignment is critical. Contracts written with virtual and freelance workers should include deliverables that are aligned with the success of the same goals of the internal team they support. The problem in trying to accomplish that today is partly technological. Today, most HRIS and performance management systems do not have a way to include the multiple categories of outside workers. Hourly contract workers are easily included, but freelancers that may operate on a fixed project cost are difficult to include.

What are employees, managers and decision makers looking at to make performance management more effective?

The trend today is to provide real-time feedback for enhanced performance management. This is sought to either replace the formal performance appraisal or to supplement it. Many larger companies are looking to technology to accomplish this, particularly with online feedback tools and apps.

With real-time feedback tools, employees, managers and those outside of the team can provide feedback at any time during a project or initiative. These tools are especially useful when trying to gather inter-departmental feedback or feedback for or from remote workers.

Companies are also moving toward a greater level of transparency to share information such as salary bands for each job category to employees. Additionally, they are using analytics to assess the fairness of actions such as compensation values, promotions, and internal hiring.

What are some of the new things being introduced in Performance Management that are working/not working?

I have mentioned previously, the decision of some companies to eliminate performance management scores. This doesn’t work well in motivating employees and also makes it difficult to have legally defensible documentation for terminating someone’s employment or downsizing redundant teams. That said, an elimination of performance scores seems to be better received when it is applied to an hourly workforce and not a salaried workforce. In some companies, performance reviews have been replaced with development discussions for the hourly workforce while performance reviews remain in
the place for the salaried workforce.

If not periodic appraisals, then what & how?

While all appraisal procedures have their pros and cons, I think that periodic appraisals are a fairly good approach. No method will be perfect, but periodic and ongoing appraisals will keep goals and objectives top-of-mind with employees. An annual appraisal tends to become a “check mark” activity for both the manager and the employee and does lend itself well to job roles that have constantly changing goals.

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